Dusseldorf For the Swiss watch industry, Corona is “the worst crisis in history”, Ricardo Guadalupe, head of the watch brand Hublot from Nyon near Geneva, said in an interview with the Handelsblatt. “The industry will see a minus of 20, 30 percent over the year,” predicts the 55-year-old.
When asked whether he also expects factories to close, the Swiss said: “As is so often the case, and not only in my industry: the strong will survive, the weak will have real problems.” Cash is now for many brands “the main issue. You should be able to hold out at least 18 months if you have to. ”
Guadalupe warned the Handelsblatt against the consequences of Corona, but also those of the worldwide shutdowns: “The medical drama was followed by an economic one. Now we find ourselves in a global consumer crisis. Consumption was brought to a complete standstill. So far it is not clear when what can be opened again. And then there will be the question of how quickly people’s trust returns. ”80 percent of his own sales network was“ like dead ”in the first weeks of the pandemic. “You can then transfer that to our sales.”
At least the luxury expert sees a glimmer of hope: “The Chinese are now the most important customers of the global luxury goods industry. And I see the country very positively again. Hublot is already seeing growth of over 30 percent in mainland China. ”
Guadalupe’s restriction: “Of course, this does not compensate for the sums lost due to the fact that the Chinese are no longer traveling, do not spend holidays in Europe or the USA, where they would like to stop by in our boutiques.” Hublot is part of the French luxury conglomerate LVMH and, with a turnover of around 700 million Swiss Francs, is one of the most successful brands in the country.
Read the full interview here:
Monsieur Guadalupe, this year Hublot is celebrating its 40th birthday. What did Corona change or destroy in your anniversary plans?
Corona has a huge impact on many things – our party plans are among the minor problems, even if we wanted to celebrate our birthday in spring at our Baselworld trade fair, which had to be canceled. We had no choice but to celebrate on social media and hope that we can catch up on the party at some point.
The Swiss watch industry has experienced many crises. What is different this time?
Corona does not hit certain countries or regions, but the entire globe. It is a truly global crisis – and the worst in history. The medical drama was followed by an economic one. Now we find ourselves in a global consumer crisis. Consumption was brought to a complete standstill. Check out tourism! This industry is doing worse than the watch industry. So far it is not clear when what can be opened again. And then there will be the question of how quickly people’s trust returns.
When did you realize what Corona would mean for Hublot, but also for your entire industry?
On March 17th we stopped our production in Nyon on Lake Geneva. There has never been anything like it in the 40 years of our existence. If I don’t build clocks, I can’t sell clocks. And the customers reacted similarly: In such phases, people have problems other than the question of which beautiful watch they can buy. 80 percent of our sales network was dead. You can then transfer that to our sales.
How many shops do you have worldwide?
There are 104 of our boutiques worldwide, 47 of which we operate ourselves. Overall, we are represented at around 800 sales points.
Do you expect some watch brands to give up in this crisis?
As is so often the case, and not only in my industry: the strong will survive, the weak will have real problems. You can see that in gastronomy too: a restaurant may have been so good. If there is only liquidity for a month, it quickly becomes tight.
Hublot is one of the strong ones?
For sure. We can look back on 15 very good years and have the appropriate resources, not just for a month or two. Cash is the main problem for many now. You should be able to last at least 18 months if you have to. We are also part of a very strong group.
… Of the French conglomerate LVMH, the number one in the luxury business.
And each of the brands in this group is independent on the one hand and can search and find its own way. On the other hand, of course, we also have support at our headquarters.
LVMH controls a wide range of luxury brands from a wide range of areas – from champagne to leather accessories and fashion, from jewelry to watches. Which areas are causing more pandemic problems and which less?
I think it hits the watch and jewelry brands the hardest.
Perfumes don’t cost that much. You treat yourself to it in between. Just like a good champagne or whiskey. You can also get leather goods for a few hundred euros. You can also order something online. And if you don’t like it, you send it back. The prices of our watches, on the other hand, start at around 6000 euros. You want to see, touch and feel such a product.
Her sister brand in the group, TAG Heuer, will in future be managed by Fréderic Arnault, the only 25-year-old son of LVMH main owner Bernard Arnault. Does that also increase the pressure on you to deliver results?
We are in completely different customer and price regions. If LVMH’s watch business is a pyramid, then Hublot is definitely at the top. Zenith follows. Then TAG Heuer comes. Our average watch costs around 18,000 euros, maybe 11,000 at Zenith and around 3,000 at TAG Heuer. So we don’t compete with each other, but with other brands in each segment. In our case, for example, with Audemars Piguet or Panerai. The internal LVMH cohesion only makes us stronger outside.
Because of Corona, not only stores and factories had to be closed. Tourism is now missing worldwide – and the mood to buy is only slowly returning. What kind of minus do you expect this year – for the industry as for Hublot?
March already plummeted 15, 20 percent. The second quarter – April, May, June – then looked much, much worse. We don’t have to talk about it. The industry will see a minus of 20, 30 percent over the year, I’m afraid. It will depend on how consumer interest and global tourism will come back in the fourth quarter.
Do you see light at the end of the tunnel in Asia?
The Chinese are now the most important customers of the global luxury goods industry. And I see the country very positively again. Hublot is already seeing growth of over 30 percent in mainland China. But of course that does not compensate for the sums that are lost as a result of the fact that the Chinese are no longer traveling, do not spend holidays in Europe or the USA, where they would also like to stop by in our boutiques.
They sponsor a lot, for example in football, where Hublot is also a partner of FIFA until the 2022 World Cup in Qatar. This sport also suffers extremely. How do you experience your partners there: officials, club bosses, players?
The European Championship also had to be postponed. Sport generally has a hard time, which of course also affects us. The good thing about football is that at least games take place, albeit in front of empty ranks. But at least fans can follow their stars via TV, Internet and streaming services. The football brand is at least visible, if not necessarily up close. Of course, we as advertising partners also lack the experience, the live experience. I hope that the European Championship can take place again next year in full. But as of today, I’m really not sure.
What about Formula 1, where do you cooperate with Ferrari?
The same applies there as for football: after all, the races take place. We’ll see if it’s enough for people to watch a Grand Prix on TV.
Hublot lives from the Big Bang model like Audemars Piguet from the Royal Oak. What are the advantages and disadvantages of being a “one trick pony” as a watch brand?
We are not that dependent on the Big Bang, but of course it is our biggest icon. And I think that every big brand needs such an icon. At Audemars Piguet, it’s the Royal Oak. At Patek Philippe the Nautilus, at Rolex the Oyster, at Omega the Seamaster.
And now the Big Bang is also available as a smartwatch. What do you hope for from the Big Bang E?
That we can conquer this niche market of smartwatches in the luxury sector for us. There are people who like such electronic watches, but do not want the mass product Apple Watch. We offer them an alternative …
… which at Hublot already costs over 5000 euros and should therefore be the most expensive smartwatch in the world.
It is, yes. But we are also talking about a small edition of perhaps 2000 pieces and the finest materials – from ceramics to titanium.
Apple sells more watches today than the entire Swiss watch industry. What do such numbers mean?
Apple has always managed to revolutionize a complete product group: iPod, iPad, iPhone, MacBooks – these have always been very credible products. I think that for us as an industry, the Apple Watch is also an advantage. Because at some point this gives many customers the idea of discovering their wrist for something that may be less practical but is all the more valuable: a mechanical watch.
What about the digitization of your industry?
It is becoming increasingly important above all in one field: in the customer experience. The more emotional we make this experience, the better in times when people simply can’t travel or want to travel as much.
Do you believe in e-commerce or in brick-and-mortar retail?
If pure e-commerce accounts for five percent of our sales, I will speak of a great success. For me, online is still primarily a tool to get people excited about our products and then lure them into our stores.
How important is social media today? You yourself are already a star on Instagram with around 128,000 followers …
… which I only have because I am the CEO of Hublot. This is also an opportunity for me to get in touch with our potential customers.
You grew up in Neuchâtel, studied in the United States and tell frankly that you come from a humble background. What does that mean? And what have you got from this youth – in terms of values or attitudes?
My family came from Spain. My father fought on the wrong side, the Republican, in the civil war, if you will. So he had to leave the country. Switzerland became a prime example for him and us of a country that is inclined to integrate. I went to school with the children of doctors and engineers and always knew: I get at least the same opportunities as them. What I do with it is up to me. I can only thank the country for that.
Have you ever suffered from racism?
Didn’t suffer. But of course I’ve already seen him, even though my childhood was a long time ago. It never had anything to do with what is reported in part from the USA.
Next year there will only be one big watch fair: the “Watches and Wonders” in Geneva. Most recently, Hublot and the other LVMH brands have also left the previous Baselworld competition. Are you sorry for the end in Basel – or are you really happy?
I’m sad because I came to Baselworld around 30 years ago. On the other hand, it has been pretty crazy for a long time that such a manageable industry as our two such expensive trade fairs can afford it – even at very different times, which meant that traders and customers from Asia had to fly twice to distant Switzerland. Geneva is certainly the more logical location for our industry because it is the capital of watchmakers – and the home of the biggest brands.
What will Corona change in your industry?
Corona changes the world, so the virus will change us too. In the future, it will be even more about sustainability and credibility.
Monsieur Guadalupe, thank you very much for the interview.
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